Shenango Inc. v. Apfel
| Decision Date | 24 September 2002 |
| Docket Number | No. 00-2525.,00-2525. |
| Citation | 307 F.3d 174 |
| Parties | SHENANGO INCORPORATED; Stelco USA, Inc.; Stelco Coal Company; Mueller Industries, Inc., Appellants v. Kenneth S. APFEL, Commissioner of Social Security; Michael H. Holland; William P. Hobgood; Marty D. Hudson; Thomas O.S. Rand; Elliot A. Segal; Carl E. VanHorn; Gail R. Wilensky, Trustees of the United Mine Worker of America Combined Benefit Fund |
| Court | U.S. Court of Appeals — Third Circuit |
David J. Laurent (Argued), Babst, Calland, Clemens and Zomnir, P.C., Pittsburgh, PA, for Appellants.
Peter Buscemi (Argued), Morgan, Lewis & Bockius LLP, Washington, DC, John R. Mooney, Elizabeth A. Saindon, Mooney, Green, Gleason, Baker, Gibson & Saindon, P.C., Washington, DC, David W. Allen, Office of the General Counsel, UMWA Health and Retirement Funds, Washington, DC, for Appellees, Trustees of the UMWA Combined Benefit Funds.
David W. Ogden, Assistant Attorney General, Harry Litman, United States Attorney, Mark B. Stern, Jeffrey Clair (Argued), Attorneys, Civil Division, Washington, DC, for the Federal Appellee, Commissioner of Social Security.
Before SLOVITER, NYGAARD and McKEE, Circuit Judges.
Shenango, Inc., Stelco USA, Inc., Stelco Coal Co. and Mueller Industries (hereinafter collectively referred to as the "Companies") challenge the Commissioner of Social Security's assignment of responsibility for health care premiums of approximately 70 retired miners and their qualified dependents pursuant to the Coal Industry Retiree Health Benefit Act of 1992 (the "Coal Act"), 26 U.S.C. §§ 9701-9722. The Companies argue that the Act is unconstitutional as applied to them pursuant to Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998). For the reasons that follow, we conclude that the assignments are not unconstitutional as applied, and that the district court did not err in dismissing the Companies' challenge to the assignments. However, before we explain our reason, it will be helpful to explain the historical background and context of this dispute.
The Coal Act was enacted in 1992 "to ensure that retired coal miners and their dependents would continue to receive the health and death benefits they had been receiving since the 1940s pursuant to a series of collective bargaining agreements." Anker Energy Corp. v. Consolidation Coal Co., 177 F.3d 161, 163-64 (3d Cir.1999). Because the origins and history of the Coal Act are set forth in great detail in the Supreme Court's opinion in Eastern Enterprises, as well as in our opinions in Unity Real Estate v. Hudson, 178 F.3d 649 (3d Cir.1999), and Anker Energy, we need not repeat it here. Rather, we offer the following narrative from our opinion in Anker Energy as background for our analysis:
In 1947, the United Mine Workers of America ("UMWA") and the Bituminous Coal Operators' Association ("BCOA") agreed upon the first of a series of National Bituminous Coal Wage Agreements ("NBCWA" or "wage agreement"), which specified the terms and conditions of employment and provided health and pension benefits for miners. The 1947 NBCWA established the United Mine Workers of America Welfare and Retirement Fund [W & R Fund], which used the proceeds of a royalty on coal production to provide pension and medical benefits for miners and their families. The 1947 NBCWA did not specify the benefits to which miners and their families were entitled, instead leaving this task to three trustees in charge of the Fund. In 1950 the union and the industry association agreed upon a new NBCWA that created a new Fund financed by a per ton levy on coal mined by signatory operators. Like the 1947 Fund, the 1950 version did not promise specific benefits, and the benefits were always subject to cancellation or change.
This system did not change significantly until 1974 when, to comply with the newly enacted [Employee Retirement Income Security Act], the UMWA and the BCOA negotiated a new wage agreement that created four trusts funded by royalties on coal production and premiums based on hours worked by miners. Under the new agreement, the 1950 Benefit Plan covered miners who retired before January 1, 1976, and their dependents, while the 1974 Benefit Plan covered miners who retired after 1975 and their dependents. Both Plans provided nonpension benefits, including medical benefits.
The 1974 NBCWA explained that it was amending the previous system to provide health benefits for retired miners "for life," and to their widows until death or remarriage. Because of this broadened coverage the number of eligible benefit recipients increased dramatically, and the Plans began losing money.
In response, the 1978 NBCWA assigned responsibility to signatory employers for the health care of their own active and retired employees. The 1978 agreement also restricted the 1974 Plan so that it would provide health benefits only for "orphaned" retirees, those whose last employer had gone out of business or otherwise ceased contributing to the Plans. To ensure the Plans' solvency, the 1978 NBCWA included a "guarantee" clause that obligated signatories to make sufficient contributions to maintain benefits during that agreement, and the union and operators amended the Plans to include "evergreen clauses" that required signatories to contribute to the Plans if they remained in the coal business even if they never signed another wage agreement.
Despite the 1978 NBCWA and subsequent attempts to improve the Plans, they continued to lose money because of the increase in beneficiaries, the escalating costs of health care, and the flood of signatory companies abandoning the Plans. In 1992 Congress responded by passing the Coal Act.
In enacting the Coal Act, Congress declared that the Act was intended to remedy problems with funding retiree health benefits in the coal industry, to allow for sufficient operating assets for the health benefit plans, and to provide for the continuation of a privately funded and self-sufficient program for the delivery of health care benefits to retired miners and their dependents. Pub.L. No. 102-486, § 19142(b), 106 Stat. 3036, 3037 (1992), 26 U.S.C. § 9701 note. Accordingly, the Act required certain benefit plans previously established under the UMWA collective bargaining agreements to be merged into a new plan — the United Mine Workers of America Combined Benefit Fund.1 26 U.S.C. § 9702(a). The Combined Fund provides health and death benefits to retired coal miners and dependents who, as of July 20, 1992, were eligible to receive, and were receiving, benefits under the UMWA 1950 or 1974 benefit plans. 26 U.S.C. §§ 9703(a), (b)(1), (c), (e) & (f). Benefits paid through the Combined Fund are funded in part by premiums imposed on "signatory coal operators," i.e., certain coal operators that employed an eligible beneficiary and had signed a collective bargaining agreement between the UMWA and BCOA, a multiemployer group of coal producers, or other "related persons" connected to the signatory operator by common ownership or control. See 26 U.S.C. §§ 9701(c)(1) & (c)(2), 9704, 9706.
The Act directs the Commissioner of Social Security2 to assign each individual beneficiary to one of these signatory coal operators or its "related person." The assignment is determined by the length of the beneficiary's service, the date of service, and whether the employer signed national collective bargaining agreements with the UMWA in 1978 or later. 26 U.S.C. S 9706(a). The Act establishes a three tier mechanism for making assignments that we have described as the "linchpin" of the Coal Act's statutory scheme. Unity Real Estate Co. v. Hudson, 178 F.3d at 654. The Act provides in relevant part:
(a) In general. — For purposes of this chapter, the Commissioner of Social Security shall, before October 1, 1993, assign each coal industry retiree who is an eligible beneficiary to a signatory operator which (or any related person with respect to which) remains in business in the following order:
(1) First, to the signatory operator which —
(A) was a signatory to the 1978 coal wage agreement or any subsequent coal wage agreement, and
(B) was the most recent signatory operator to employ the coal industry retiree in the coal industry for at least 2 years.
(2) Second, if the retiree is not assigned under paragraph (1), to the signatory operator which —
(A) was a signatory to the 1978 coal wage agreement or any subsequent coal wage agreement, and
(B) was the most recent signatory operator to employ the coal industry retiree in the coal industry.
(3) Third, if the retiree is not assigned under paragraph (1) or (2), to the signatory operator which employed the coal industry retiree in the coal industry for a longer period of time than any other signatory operator prior to the effective date of the 1978 coal wage agreement.
26 U.S.C. § 9706(a)(1), (2) & (3). Once the Commissioner makes the assignment under § 9706, the assignee must then pay the annual premiums to the Combined Fund based on the amounts required to provide health and death benefits for the assigned beneficiaries.
If a miner or his3 dependents cannot be assigned under this scheme, his benefits are funded by either asset transfers from one of the Combined Fund's predecessor benefit plans, see 26 U.S.C. § 9705(a), transfers from the U.S. Treasury's Abandoned Mine Land Reclamation Fund, see 26 U.S.C. § 9705(b), 30 U.S.C. § 1232(h); or, if those sources are insufficient or unavailable, an additional unassigned — or "orphaned" — retiree premium that the Act imposed on all signatory operators. See 26 U.S.C. §§ 9704(d), 9705(a)(3)(B), 9705(b)(2).
The Coal Act also contains several provisions that, taken together, treat a commonly controlled group of related corporations as a single employer for purposes of...
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